'There's reason for the millions of private renters to be optimistic.'

27/02/2018

David Pipe says proposals to reform the private rented sector mean there's reason to be optimistic for millions of tenants.

There is no doubt that the private rented sector (PRS) is becoming more and more important, both as a growing part of our housing market and as a political priority.

Recently released figures from the English Housing Survey show that the sector now houses 4.7 million households, 20 per cent of the total. Standards, while by no means universally poor, are highly variable and 27 per cent of privately rented homes don’t meet the decent homes standard (compared to 13 per cent in the social sector and 20 per cent in owner occupation).

It’s no surprise then that government are taking more of interest in driving up standards in the PRS, and taking tougher action against the small minority of rogue landlords who exploit vulnerable tenants at the very bottom end of the market.

In recent years quite a lot of policy changes have been announced, however many of these have ‘flown under the radar’ somewhat, having been overshadowed by more headline-grabbing announcements on home ownership and the ongoing debate about the loss of much needed social housing. Never-the-less much of this change is very sensible, particularly in relation to tackling rogue landlords and improving the letting agency industry.

On the former, many local authorities have previously lacked both the resources and the necessary tools and powers to truly tackle the problem. At a time when council budgets are under unprecedented pressure, it is perhaps no surprise that between 2009/10 and 2015/16 there has been a 19 per cent fall in the amount that they are spending on enforcing standards in the PRS. Furthermore those who have continued to devote resources to prosecuting criminal landlords often reported that the fines being handed down by magistrates were, in their view, nowhere near sufficient to act as a meaningful deterrent.

However since April 2017 councils have been able to issue civil penalties for a number of housing offences, as an alternative to criminal prosecution. In many cases these should speed up the enforcement processes and reduce the need for expensive court appearances. Crucially, the maximum fine for a single offence is £30,000, a substantial penalty, and local authorities are allowed to retain this money to cover the costs of their enforcement work.

From this April, these will be also supplemented by the introduction of new banning orders. These will prevent an individual who has been convicted of certain offences from continuing to operate as a landlord or letting agent. This is a new power which should make it easier for councils to tackle repeat offenders, and a new database of rogue landlords will also be created so that councils can share information about these individuals with each other.

Similarly, government has also announced it intention to regulate letting agents and to ban them from charging fees to tenants. Although the detail of regulation has still to be determined and the ban on fees is not expected to be introduced until next year, these are both measures that we have been calling for for some time.

Letting agents have a vital role to play in professionalising a sector that is characterised by small scale, part time, often accidental landlords. Many of these rely on agents to provide the knowledge and expertise they need to be a good landlord. However there is a great deal of evidence to suggest that the industry is riddled with poor practice and nowhere is this more apparent than with regards to fees. These often greatly exceed the cost of providing services and in some cases duplicate fees which are also charged to landlords. The proposed changes are therefore very welcome.

There is of course still much more that government could do, for example to also improve security for tenants. This feels particularly critical as the ending of an assured shorthold tenancy is now the most common cause of homelessness. But there are certainly reasons to feel more optimistic about the future of the sector.

David Pipe is policy and practice officer at the Chartered Institute of Housing.

For a more thorough overview of government policy in relation to the PRS, and further analysis of how it might work in practice, download our latest member briefing

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